Investment Strategy

The Magni Approach is Built on Proprietary Research on Governance

  • We research the regulatory and economic infrastructure of all investable countries in the world and derive a Magni Country Score and rank.
  • We assess the transparency and honesty of each country’s accounting, legal, regulatory and adjudicative systems. When countries adhere to transparent and honest practices in these systems, the result is an environment for effective corporate governance.
  • We organize widely-accepted economic principles and have shown that countries with effective corporate governance outperform those that do not.
  • We believe that Countries Matter™ when constructing international portfolios and country selection is more important than security selection.

Governance

International equities are playing an ever more important role in global wealth management. Despite well-accepted economic principles about the role of economic infrastructure on equity valuations, most traditional investment analysis and products do not currently incorporate the information as it is not available in a consistent, usable format.

Magni has a repeatable process for researching the economic infrastructure of countries and turning the research into investment information. Portfolios built by Magni using this process have demonstrated significant absolute and risk-adjusted performance for more than a decade using a rigorous forward-tested model.

Countries do matter when investing internationally and should be considered when making investment decisions. Further, the meaningful changes in the economic infrastructures means the country research should be continuously maintained.

The Magni Difference

An iceberg is a metaphor for traditional investment analysis regarding international equities. Most international analyses parallel domestic analyses by focusing on the traditional metrics that are akin to the visible part of an iceberg. The hidden information is like the submerged portion of an iceberg. It is key to success (or even survival) but not readily discovered.

International equities iceberg metaphor
 

Sustainable Wealth Creation Principles

Sustainable Wealth Creation principles were created to enable the collection and organization of country level data about the respective economic infrastructures. The resulting information can be used when making investment decisions. Sustainable Wealth Creation addresses three very important questions:

  • Do financial statements accurately reflect a company’s position?
  • Are shareholders protected and are there adequate controls?
  • Can company leadership make decisions confidently…and without interference from a corrupt government?

Sustainable Wealth Creation principles help answer these important questions by investigating the accounting, legal, regulatory, adjudicative, and economic structures of a country.

Sustainable wealth creation principles for global wealth management

 

Countries Matter™ – Considerations Vary Significantly Over Time.

Economic systems change at a surprisingly fast pace. As illustrated by the nearby graph of Emerging Market weightings using the Magni analysis, over a multi-year timeframe the economic systems of countries can change significantly. Since the information varies over time, the information needs to be monitored and refreshed to gain important insights when making investment decisions involving international equities.

Magni Emerging Market Weightings 2002 – 2017

 

Emerging Markets' Score History

 

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